Homeland Security sets uniform policy on prosecuting fraud

The Homeland Security Department on Wednesday published an interim rule for prosecuting fraud, especially with regard to damage claims arising from Hurricane Katrina.

The rule applies to all DHS agencies and divisions and for the first time gives the Federal Emergency Management Agency an administrative process to prosecute cases of suspected fraud. Before FEMA had to refer such cases to the Justice Department, which didn't always prosecute them, according to a DHS announcement.

"The interim rule will provide a uniform, departmentwide administrative process for assessing penalties and recovering funds procured by fraud under departmental programs," a notice in the Federal Register stated. "It replaces the existing . . . rules [for] entities transferred from eight departments and the General Services Administration into DHS."

According to the rule, anyone who knowingly submits a false claim or statement to any part of DHS could be fined as much as $5,500, plus double the amount wrongly claimed. The interim rule took effect Wednesday, and DHS is accepting comments until Nov. 14.

DHS said all its major agencies and divisions except FEMA have had regulations and a process for prosecuting fraud. The new rule does not make any significant changes to the process those agencies and divisions already use. Rather, it makes the regulation and process uniform across the department.

Part of the urgency in establishing the new rule, however, is the possibility that fraudulent claims will be submitted with regard to damage caused by Katrina.

"FEMA will have the same administrative procedures and administrative adjudication available to the rest of DHS, and, we estimate, a greater likelihood that legal action may be taken on cases that the Department of Justice might not otherwise undertake to prosecute," department officials said in the announcement.

DHS expects the new policy also will reduce caseloads in federal courts by diverting actions to administrative proceedings within the department. "Defendants will have the advantage of a less formal, perhaps less expensive, adjudication and swifter resolution of complaints brought by DHS," the notice said.